The European Commission wants to close loopholes in the taxing of interest on savings in a move to crack down on tax evasion.This content was published on November 13, 2008 - 20:54
Switzerland, which is not a member of the European Union, has already signalled its willingness to discuss the new measures because they will not affect the country's banking secrecy legislation.
Since 2005, Switzerland has levied a withholding tax on the interest income of EU taxpayers with an account in Switzerland, which will eventually reach 35 per cent.
The EC's commissioner for taxation and customs, László Kovács, commented on Thursday that there were loopholes in the present system.
When non-EU countries such as Switzerland and Liechtenstein signed the EU's savings tax rules, they only covered bank accounts. He said the current scope of the EU savings tax directive needed to be extended.
"At present, it is relatively easy for individuals to circumvent it (the directive) ... it is beneficial to all parties to go further in extending the scope of measures," Kovács said.
Ways of getting round the rules included using trusts or foundations where there was no income tax, he said, or rearranging financial portfolios so that income from interest fell outside the EU's formal definition of interest payments.
Swiss Economics Minister Doris Leuthard said earlier this month that Switzerland was open for dialogue on the issue as long as there was "protection of privacy" with banking secrecy.
Tax evasion is not a criminal offence in Switzerland; tax fraud is.
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